Tom Bozzuto's Blog

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Guest Post: We Can’t Be A One-Company Town

April 16, 2013
Guest Post, Reflections

This bylined article, authored by Bozzuto founding partner John Slidell, is reprinted from the April 12, 2013 issue of the Washington Business Journal.

http://www.bizjournals.com/washington/print-edition/2013/04/12/we-cant-be-a-one-company-town.html

A lot of people in this region are talking about how to get us to act as a region, but we just keep talking. It’s time for action. We are now at a pivotal point in our local economic life cycle.

The Greater Washington metropolitan area has, for decades, enjoyed unparalleled growth and prosperity, largely fueled by a steady increase in federal government spending and procurement strategies that have created jobs within the region. Private businesses, including large corporations, have become so accustomed to the steady growth fueled by federal spending that they have neither identified nor acted upon the need for their proactive involvement in the economic development of the region.

However, according to Economy Forward, a report from the Metropolitan Washington Council of Governments released in September 2012, the economic underpinnings that the government provides in this region are threatened. Our region ranked 13th out of 15 in terms of growth among major metro areas from December 2010 to December 2011. Between 2010 and 2015, the share of metropolitan Washington’s gross regional product derived from federal government spending is forecast to decline by 3.5 percent.

The metro area will no longer thrive as a one-company town. The region is now in a global competition for high-skilled workers and private sector employers, and our public and private sector leaders need to work together like never before to create and implement a strategy to successfully grow the economy.

This is the new reality for the region. Leaders in Washington, from all sectors, must forge a strong and effective economic development collaboration involving government officials at all levels, private sector employers, and academic and nonprofit institutions.

The business community here is in a unique position to proactively affect industry growth and diversity. The Urban Land Institute’s core mission is convening and bringing together disparate entities to solve land use challenges. Over the past year, a group of ULI members, the Regionalism Initiative Council, has been meeting to address issues facing the region. Now, ULI is working to move the needle forward. The process ULI recommends for action is creating a strong, multisector coalition to develop a focused regional business plan for our area, with public, private, nonprofit, philanthropic and institutional stakeholders working together.

There are plenty of challenges to tackle in our region. They include the region’s transportation congestion issues, funding stability and reliability for Metro and all of our regional transit systems. We also need new infrastructure investment mechanisms that direct investment to targeted activity centers to maximize benefits and planning for adequate utility capacity to provide water, sewer services and electricity to handle the loads generated by future growth of the region. Prioritizing these challenges and creating an action plan to address them is everyone’s business.

As important as the action agenda will eventually be, forming the coalition to tackle the problems is just as important. This spring, ULI Washington has initiated an outreach process to existing organizations including the Metropolitan Washington Council of Governments, the Greater Washington Board of Trade, the 2030 Group, the Chesapeake Crescent Initiative and the Federal City Council.

Early conversations indicate that these organizations are eager to move the region forward together. Individual stakeholders at the leadership level of the region’s largest employers, anchor institutions (hospitals, colleges, and universities), local elected councils and boards, local economic development departments and others are being approached currently, and ULI Washington is building a coalition that will develop a regional business plan. A coalition kickoff meeting will be scheduled for early summer to begin the process.

The bottom line is this: Right now, there is almost no one in this region who wakes up every day thinking about what the region needs to prosper in the future and no dedicated group of leaders moving a broad coalition forward in the same direction. The ULI outreach effort will catalyze regional leaders to create such a person or people and an institutional structure to back the work with financial and human resources. It doesn’t matter where the leadership rests, either in an existing organization or a new one, but there must be coordinated forward motion.

John B. Slidell is district council chair for the Urban Land Institute, Washington, and founding partner of The Bozzuto Group.

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Bozzuto’s 25th Anniversary: A Look at our Future

February 20, 2013
25th Anniversary, Development, Employment, Featured, Reflections

As we begin to commemorate the 25^th anniversary of the company, which my partners, John Slidell, Rick Mostyn, the late Bernie Lubcher and I began in 1988, we look to 2013 as a year to celebrate our successes, reflect on our past, and express gratitude to those who have played an integral role in getting us to where we are now. And as we consider our past and look towards our future, I’m reminded of particular moments that became turning points in our company’s history.

Today, I believe we experienced one of those moments. I am writing to share several announcements that will undoubtedly shape the future of the company that makes me so proud.

My first announcement is one that I make with mixed emotions. John Slidell, co-founder and Vice Chairman of The Bozzuto Group, and President of Bozzuto Land Company, will be stepping down from day-to-day operations of the company to have more time to pursue other interests. I am thrilled for my partner and friend of more than 25 years, but we all, and I especially, will miss his daily insight, guidance, wisdom and special brand of wit. I know that all who have met and worked with John over the years join me in wishing him all the best as he transitions into his new role and prepares to experience new adventures.

Secondly, it is with great pride that I announce the promotion of my son, Toby Bozzuto, to the position of President of The Bozzuto Group. Toby, who has been with the company almost twelve years (and who has lived with it two-thirds of his life), has shown great leadership in his former role as President of Bozzuto Development Company. While he will continue to play an integral role within that company, he will now assume overall responsibility for the day-to-day direction of The Bozzuto Group.

Thirdly, I am delighted to announce the promotion of Steve Strazzella to President of Bozzuto Development Company. Steve, who has also been with us more than a decade, has overseen some of our largest construction and development projects and has been a leader in finding new development opportunities. He has worked very closely with Toby in providing direction to BDC the past few years, and I look forward to watching him continue our legacy of innovation and quality in our new developments.

I have said many times that our people are the foundation of this company, and today I want to recognize the incredible talent and successes of our employees, and particularly those of John, Toby and Steve.

As we transition to a new era of Bozzuto leadership, some things will stay the same. I will remain in my role as Chairman and CEO of The Bozzuto Group and Rick Mostyn will continue in his role as Chief Operating Officer as he has these past five years.

And most importantly, our core values and our vision for the company remain the same. We will continue to be guided by a fundamental belief in Concern, Creativity, Passion and the Pursuit of Perfection. And as always, we remain committed to our goal of being the best real estate company in the country.

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Improving our Transportation Infrastructure: Thoughts from a Builder

November 26, 2012
Construction, Featured, Reflections

There has been a lot of discourse in the local media lately about the need for transportation funding in Maryland and Virginia, with some folks arguing that all of whatever money is available should be spent on mass transit. Others argue that while mass transit is important, we need to spend most of the money we have on highway improvements. As a builder, this is an issue about which I have an opinion and, guessing that the purpose of a blog is to offer an opinion, I will do so here.

First, as a reminder for anyone who reads this, my company has long been involved in developing, building and managing high density housing. We have been building in planned community and urban areas for most of the time we have been in business. We have built, and love to build, right on or adjoining public transit sites. We love Smart Growth. We believe in and have practiced Transit Oriented Development. We think of ourselves as a company that will thrive as America becomes increasingly urbanized.

Secondly, and before getting into the issue of how transit money should be spent, it seems important to make the point that it needs to be spent. Despite the need to pay down our national debt, we desperately need to spend money to improve the infrastructure in this country. If one looks at developed and developing countries around the world, what clearly differentiates prospering countries from those in which economic development has been held back is the level of national commitment to infrastructure. There was once a time when America’s commitment to its infrastructure allowed us to lead the world in economic development. Not anymore.

Today, our roads are a mess. Our transit systems are an embarrassment when compared to those in much of Europe and Asia. And our utility systems, as most recently demonstrated by Hurricane Sandy, are pathetic. We cannot continue to ignore them.

But this piece is not about our utility systems. It’s about transit. And it is about the need for us as a country and a region to spend money on both public transit and roadways.

For some reason, thinking has emerged among a small coterie of people that a dollar spent on highway improvement, expansion, or maintenance is a dollar taken away from public transit. The argument I suppose goes something like this: every time a road is expanded or repaired it allows more people to escape to the suburbs; the suburbs are bad because they are an inefficient use of land and besides, they are boring; so we should not spend any money allowing people to live there. The flaws in this argument are that first, a lot of people already live there and second, the people who live there and those who want to are taxpayers too.

What we in our company see among the thirty-some thousand people who rent from us and the thousands who have bought homes from us is that people are different and have different tastes in where they want to live. An increasing number of people, and particularly those without children, want to live in-town, in very high density situations, and ideally, in a place where they can walk or take transit to everything. On the other hand, as they get older, many of these same people and others of all ages would rather live in a planned community in the suburbs or just in the suburbs. Many of these too would love to minimize time in their car but they can’t because low density doesn’t support public transport. The car is what these people use to get to work, to shop, and to get most everywhere else they need to go.

To argue that we should purposely refuse to maintain the roads these people need or refuse to build new ones based on the wish that doing so will force everyone to live in urban environments where they can walk to work strikes me as hopelessly naïve. It also strikes me as being fairly un-American; but then, that’s just me.

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Are We Overbuilding?

October 24, 2012
Construction, Development, Featured, Reflections

There is much discussion of apartment overbuilding. Are too many apartments being built nationally or even locally? Is a correction facing the apartment industry? I’m asked this question, in one form or another, all the time. And I have an answer; one that on the surface might appear trite but I believe is nonetheless accurate.

My answer is this: we are not overbuilding apartments; we are creating insufficient jobs. I say this because if you looked at demographics alone, this country needs far more than the 235,000 or so apartments the industry will build this year. With a population of young people almost as large as the Baby Boomers coming out of college, and with the deterioration and abandonment of older rentals, it is pretty generally agreed that we need to add 300,000 net new apartments every year just to stay even.

The problem is that, as everyone knows, we are living through a jobless recovery. Unless this changes, unless a real recovery begins soon, we may indeed be producing more apartments than can be quickly absorbed despite overwhelming demographic demand.

Now there are many explanations of why our recovery has been so painfully slow, many provided by people a lot better trained in economics than me. But one thing on which almost everyone agrees is that the behavior of our federal government during the past two years has caused, or at least significantly contributed to, monumental uncertainty in the business community. The result has been a kind of widespread paralysis that has caused many business and non-profit executives to hesitate to add to their workforce.

So, as we sit here just before a presidential election, what is absolutely clear to me is that whoever is elected President, and whoever is elected to Congress, must have one single priority and that is to create an environment of predictability sufficient for business leaders to once again make long range plans. Everything else is secondary.

And to those of you who may read this, I implore you to keep this in mind on November 6th.

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Characteristics of a Bozzuto Employee — What We Seek When Hiring

August 22, 2012
Employment, Featured, Reflections

A friend recently lost a “Toastmaster’s” competition, and when I offered my consolation he reminded me that years ago I told him I preferred to hire people who had experienced an occasional defeat in their lives. Thinking about that conversation, especially in light of the large number of unemployed people in this economy, I thought it might make sense to write a post on what kind of people The Bozzuto Group looks for when we do our hiring. And we do hire! This year we will probably bring in more than 400 new employees and, with our continued growth plans, will continue to need a lot of new talent.

In order to make this informative, I decided to get help from an expert, Kristen Reese, the person in charge of all of our company’s hiring. So, if you like what follows, credit Kristen. If not, blame me.

First, we hire nice people. “Concern” for others is our company’s primary value. It is simply much easier to teach nice people the skills they need than it is to train skilled people to be nice. And unless you’re dealing with a surgeon or a nuclear scientist, most of us do care about, and would prefer to deal with, nice people.

Secondly, we value intelligence and place a premium on education. Depending upon the position we are trying to fill, we will hire the best of both worlds.

Next, and as my friend reminded me, we are not necessarily looking for people who have won at everything they have ever tried. Generally, people who win constantly can become a bit arrogant and maybe complacent. We prefer people who have tasted defeat but not allowed it to hinder them, people who are a little humble and very “hungry.”

What do we mean by hungry? Well, one of our corporate values is “passion.” So, when we say we are looking for “hungry” people, we mean that we are looking for people who are passionate – always pushing themselves to do and be better – because that is what makes them get up and go to work in the morning and feel great at the end of the day.

And we look for passion in everyone in our organization. From the Maintenance Manager whose new life in this country started with a less than desirable job while he learned a new trade, to the Director who served her country in the Navy before embarking on a civilian career, there are endless examples at every level and within every job of people who have faced challenge and found success because they bring passion to everything they do. We want to hire more of them!

While we want to hire someone who is motivated to succeed and advance, we also look for people who understand the importance of teamwork. We reject the trite saying that “there is no ‘i’ in the word team.” We believe that an individual flourishes best when she or he can work well with others on a team and someday, potentially motivate and lead that team.

We do look at and value experience. But honestly, while experience and good credentials are important, just because someone has done something often or for a long time it doesn’t mean they are good at it. Many times I’d prefer we hire someone with energy, initiative and creativity over someone who has done “it” (whatever “it” may be) a thousand times before.

Surely, there are other characteristics we look for when we hire. We value diversity within our ranks and we look for sociable people with focus, integrity, common sense, and dignity, especially dignity. And clearly, part of the hiring process is the result of the personal relationship that builds between the candidate and the interview team. But if you put all of this together with what we’ve written above, you will understand more clearly why our culture is so strong and consistent and what it is that defines the perfect Bozzuto employee.

Interested in joining Bozzuto? Click here.

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Guest Post: The Urban Apartment Dweller — Who Are They?

July 11, 2012
Guest Post, Management

By Julie Smith, President, Bozzuto Management Company

**This article orginially appeared in Delta Associates’ Mid-Year 2012 Mid-Atlantic Class A Apartment Market report.

The DC pipeline is swelling with a growing supply of carefully planned new properties. This next round of deliveries will be a cut above what we saw out of the last cycle in terms of design, amenities and finishes. The DC landscape will change once again with old neighborhoods becoming new hotspots and newly created neighborhoods boasting exciting mixed-use rental opportunities. Mount Vernon, Shaw, Brookland, NoMa, H Street, and the Southwest Waterfront, just to name a few, will give the coveted urban renter even more options. So, who are these urban renters?

They are young. According to a recent report from the Boston Development Authority, Washington, D.C. is a young city with the third-highest concentration of young adults (ages 20 – 34) among the 15 largest cities in the U.S., trailing only Boston and Austin. Not surprisingly, this trend is playing out in Bozzuto’s portfolio of apartment communities – more than 67% of our urban renters fall in to this age group. They are also more likely to live alone if they can swing the economics. And more than half are female. Given that 75% of these customers are young and single, they are four times less likely to have children in the apartment. But they will have pets and that number will equal what we see in suburban locations.

They are rich: they are twice as likely to have an income in excess of $100,000. The number of our urban renters who have moved due to money problems and personal concerns has dropped by 60% over the past 12 months. They are twice as likely to work from home, making their apartment a place where they spend a lot of time. They are not first-time renters.

Even with the combination of historically low interest rates and credit worthy renters, they buy homes at half the rate of suburban renters but are twice as likely to leave town for a job or personal reasons. They are, in fact free.

So, wealthy, independent, and not tied down? Yes, but also educated, savvy and wired. With high expectations as it relates to service. This is a customer that we already have and one that we all want to keep as long as we can.

It is worth taking a look why we could be at risk of losing them. A little more than half own cars and are four times as likely to walk or use public transit on a regular basis. And their daily commute is less than 30 minutes. Many measure this in terms of Metro stops. So as long as they can get to where they are going within a half an hour, they consider locations all over the city that afford them this amenity. We have seen a 30% increase in residents moving due to their most recent rent increase, and more affordable options in new emerging neighborhoods have expanded their options. This means we will all find ourselves competing against multiple submarkets in this next round.

The Internet, as our primary source of commerce and their primary source of information, has led to a transparent marketplace for housing providers and housing seekers. Today’s renter is savvy and has easy access to real-time pricing and availability. They shop for apartments from their mobile devices and have their finger on the pulse of the market. They know more about us when they walk through our door than any time in the history of our business.

The good news is that they are loyal and will stay longer, on average, than the suburban renter, and will also move internally into other apartments within the building as their personal status changes. We have seen the number of renters doing this increase by over 26% in the past twelve months.

Happy residents can be our best source of referrals and it is in our best interest to create as many as we can, as those who feel underserved will take their opinions online – for all of our customers to see. The end goals of increasing asset value for our investors and building value for our existing customers are not mutually exclusive, but we believe that it starts with knowing our customer and knowing them well. And as we brace ourselves for this next wave of new product, it is critical to really understand what it will take to attract them and what it will take to keep them exactly where we want them.

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Where are we in the cycle?

May 24, 2012
Development, Homebuilding, Reflections

One of the questions we constantly ask ourselves in the residential real estate business is: “Where are we in the cycle?” In that regard, increasingly these days, the consumer hears on news broadcasts that the home sales market has “bottomed out.” Well, what exactly does this mean and just where are we? And if the home sales market is coming back, does that mean rental demand has “peaked?”

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Affordable Housing vs. The Affordability of Housing

March 22, 2012
Affordable Housing, Development, Featured, Reflections

I should make clear here at the beginning that I have long been a supporter of affordable housing and of programs that encourage affordable housing. That said, in my more than four decades in this industry, I have been troubled to see some of the most fervent advocates of “affordable housing” care so little about the affordability of housing in general. This issue has bothered me precisely because this type of advocate doesn’t even acknowledge the inconsistency in their position.

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A Louder Voice

February 15, 2012
Featured, Reflections

As some of you know, I had the extraordinary opportunity to sit with and interview President George W. Bush a few weeks ago at the National Multi Housing Council’s Annual Meeting. NMHC is the national association representing the leading companies in the apartment industry, and there were more than two thousand people in attendance at this meeting.

Regardless of your opinion of President Bush, you would have to agree that there is something awesome about having the opportunity to interview one of the 44 people who have been President of this country. At least, I thought it awesome. And, to my surprise, it was actually great fun. The President is a delightful, interesting and thought-provoking speaker. He also is quite entertaining.

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Wishes for the New Year

December 30, 2011
Featured, Reflections

Everyone is entitled to have some wishes and hopes for the New Year. Because my colleagues in our company’s marketing department talked me into creating this blog, I guess this is the place I should put at least some of mine. So, with your indulgence, here goes.

I wish that we can get through the year without a single American military man or woman injured in combat.

I wish that in 2012, unlike this past year, we have a Congress that earns its pay, a Congress that deals with its problems, pays its bills and votes for the good of the country and not just the good of their re-election campaign.

I hope that, for a change, our country has a President who has a backbone and who will do what is good for all the people, and not just what will get him votes.

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